On August 17, 2017, the U.S. Department of Justice (DOJ) announced that it had reached a $465 million false claims settlement with Mylan, the manufacturer of EpiPen, over the company’s alleged underpayment of Medicaid Drug Rebates for EpiPen. The settlement amount and terms were generally announced by Mylan in October 2016 – but back then DOJ refused to confirm the settlement.

Back in October 2016, we theorized that the announced “settlement” was likely a handshake deal, not yet reduced to writing and not signed off on by the necessary parties. It’s not surprising that it would take ten months to finalize a health care false claims settlement. In Ellyn’s government days, she worked cases that took years, not months, to get from handshake deal to announced settlement.

And in reviewing the EpiPen settlement and related unsealed documents, there were things we expected to see in the settlement; admittedly we are grizzled veterans when it comes to false claims settlements. But there were some things about this settlement that raised our eyebrows. So we will (briefly) recap how we got here and the settlement terms, and discuss the four things that surprised us about this settlement. Continue Reading The Four Things That Surprised Us in the EpiPen False Claims Settlement

For several years now, the public outcry over the issue of drug pricing and reimbursement has increased in frequency and fervor. At least one government agency wants you to know that it has been listening and wants to help provide the information necessary to forge a solution.

Back in early October, we were all transfixed by the announced Mylan settlement with the U.S. Department of Justice (DOJ) over Mylan’s alleged underpayments of Medicaid Drug Rebates for the EpiPen. Although Mylan indicated that its $465 million settlement resolved all potential liability to government programs over EpiPen’s classification for Medicaid Drug Rebate purposes, DOJ would not confirm the specifics of the settlement and it appeared that no actual settlement documents had even been drafted. We blogged our thoughts that the “settlement” was actually a handshake deal that had not been reduced to writing, had not been agreed to by the states, and had left the extent of any releases and future compliance to be negotiated. And we said Congressional scrutiny would not end due to the announced settlement.

Multiple state and government officials decried the announced settlement as inadequate. Senator Grassley went so far as to schedule a Senate hearing on the settlement, but was forced to postpone it when no one from DOJ or Mylan would agree to attend and testify.

Then the election intervened, and EpiPen rebates were yesterday’s news. However, Senator Grassley, for one, is not letting go. But at this point, his focus is more on government action, or inaction, over drug classifications. And depending on what his inquiry reveals, it may end up hurting, not helping, any government case against Mylan, and potentially other drug manufacturers, based on classification of drugs for purposes of Medicaid Drug Rebates.

Our eyebrows were raised by Mylan’s October 7, 2016 announcement that it had reached a $465 million “settlement” with the United States Department of Justice (DOJ) and “other government agencies” over its Medicaid Drug Rebate obligations for EpiPen. The timing of the announcement was especially eyebrow-raising: close to 5 pm on a Friday afternoon at the start of a long holiday weekend (Columbus Day), which effectively forestalled any government comment on the announcement.

Let’s recap how we got here. Over the last few months, multiple state and federal government entities, including Congress, had raised concerns about the EpiPen’s classification for the purpose of Medicaid Drug Rebates. Manufacturers pay lower Medicaid rebate percentages on generic drugs than on brand name or innovator drugs. Manufacturers also face a Medicaid Drug Rebate “inflation penalty” when price increases for brand name/innovator drugs outpace inflation; generic drugs are exempt from the inflation penalty. But the “Epi” part of EpiPen was the generic drug epinephrine; it was the “Pen” part, the distribution unit, which was patented and unique. More than 18 years ago, CMS said that it was reasonable to base EpiPen Medicaid Drug rebates on the “Epi” part, as a generic product. Thus Mylan paid Medicaid drug rebates on EpiPen at the generic rate and faced no inflation penalty. But earlier this year, after media reports focused on dramatic price increases for EpiPen and the lack of competitor products, questions have been raised as to whether Mylan knew, or should have known, that it needed to revisit the EpiPen classification and pay the higher higher brand/innovator Medicaid Drug Rebate rates, and face the inflation penalty, for EpiPen.

Mylan’s announcement states that the $465 million settlement provides “resolution of all potential rebate liability claims by federal and state governments as to whether the product should have been classified as an innovator drug for CMS purposes and subject to a higher rebate formula.” But in the days following the Columbus Day holiday, details on the specifics of the settlement have not been forthcoming from Mylan or the government.

Our colleagues at ML Strategies recently published their Outlook for Fall & Lame Duck, summarizing what to expect from Washington for the remainder of 2016. The full Outlook is available here, and the portion related to health care is excerpted below.

Congress returns after Labor Day for a four-week sprint that will likely be centered on funding the government by way of a continuing resolution. Since Congress was last in session, the landscape on a number of health care issues remains unchanged. The Senate version of the House-passed Cures package is still in limbo, and mental health reform is no closer to the finish line than it was after the House finally passed its package after months of negotiating. Congress will have an opportunity to advance some issues in September before returning its focus to the 2016 election. After which there will be a, post-election, “lame duck” legislative session – the scope of potential activity for which are uncertain at this point – to put the finishing touches on the 114th Congress. Here’s a look at issues that will likely come up in September: Continue Reading ML Strategies Provides Outlooks for Fall & Lame Duck

Associate Editors

Mintz Levin’s Health Law Practice

As the health care and life sciences industries continue to undergo sweeping regulatory change, your company might be facing unprecedented structural and operational challenges. Heightened government scrutiny of industry practices certainly adds to the complexity of operating in the market for all providers, payors, manufacturers, distributors, and suppliers.Read More